Yet Another Reseach Study

The research study example comes from a WSJ article by Justin Lahart titled "Rate Cuts: Cheer or Jeer." The example is as follows:

RATE REALITY

• The Hypothesis: Investors tend to take it as a given that interest-rate cuts are beneficial for stocks.
• The Test: Economists who study the perceived correlation wonder if it's so. The Fed's surprise half-point cut last week should yield more data for study.
• The Answer: Somewhere in the middle. While investors typically bid up shares after a cut, the long-term outcome depends on external factors.

Specific Study

The quote below comes from the October 10th edition of the WSJ. The article by Bob Davis is titled: "IMF Fuels Critics of Globalization." I think this is a really specific example of the type of study the Ng would like completed for the final paper.

"The IMF researchers separated "globalization" into three components -- technology, foreign investment and trade -- and looked at how changes in each of the three corresponded with changes in income inequality globally. According to the results, technology and foreign investment deepened income inequality, while trade diminished it. Overall, globalization has contributed "moderately to net changes in income shares," the IMF found."

Great Example

If you haven't read it, the article by Wessel titled "Financial Globalization's New Power Source" from set 4 of Ng's readings is a great example of what our project should look like.

Food For Thought

I think the purpose of this group project is to explore the linkages between the many different financial markets and instruments that we see every day. We should probably choose some instruments and/or markets that interest us.

One possible topic is: interest rates vs. value of the dollar vs. export rates. What i mean is: maybe we should hypothesize that low interest rates have an x% impact on export. That may be proven through the transitive principle. For instance: when interest rates are reduced, the value of the dollar declines, and when the value of the dollar declines, us exporters increase move more product and create x additional profit.

In order to find a few relevant discussions of this type we may want to do some research on economic of finance college theses. As i mentioned earlier, it is important to back up any analyses with news stories and articles illustrating our point.

Project Objective

Based on what the professor said in class, I think he will be very happy if we follow the process listed below:

1. Create a hypothesis based on one of the topics in the WSJ articles.
2. Create & conduct research to support that hypothesis.
3. Run a technical analysis or multiple analyses. (preferably those that are outlined in the professor's notes)
4. Support our analyses with real life examples from the news.

Introduction

Welcome to the team 2 blog for Professor Ng's Finance 6600 class at FDU. Blogs are a fantastic method for sharing ideas or research and building on each other's work. I hope it works for us!